A cynical commentary about developments in the South African financial markets and the incomprehensible activities and pronouncements of bureaucrats and politicians.

Friday, 13 April 2018

READY OR NOT – HERE WE COME

The two “share
prices” of the country which are the exchange rate of the rand and the yield of
the long-dated government bond both showed some weakness this month. Perhaps
because the excitement of having a new president who can both read and count is
wearing off a bit. The realisation dawns that despite these skills, the
problems caused by his predecessor are now buried deep in the fabric of the
nation. The livelihoods which have been fashioned in the top echelons of the
state and its agencies are more numerous and lucrative than most of us know. Now
that honesty and competence are hopefully returning as job-keeping requirements,
the fight-back by those who need to be fired is becoming violent and litigious.
This week an ex-chairman gate-crashed a board meeting of which he is no longer
a member. He denied that his term of office has ended. And there’s the wrangle
happening among the spooks and spies who operate our supposed security
apparatus. Just what they do is deliberately “secret” but there seems to be far
too many of them, when what we really need is plenty of trained constables able
to recognise lawlessness and act accordingly. Oh, and not sell or “lose” their
firearm.

Sagarmatha is
such a pretty name and sits well on the planet’s highest mountain. To use it
for a South African company which, we are assured, will be the continent’s largest
Multi-Sided Platform (MSP to the cognoscenti) shows confidence if nothing else.
The hype and puffery for this new company which was scheduled to be listed
today has been extraordinary, as too has been the fancy financial footwork used
in the aggregation of a number of existing enterprises into Sagarmatha
Technologies. Despite some ballyhoo in its balance sheet it is claimed that it
will be large enough to be termed a Unicorn. All this baffling jargon has been
used by commentators and journalists many of whom have their salary cheques
signed by the man behind the deal, one Dr Iqbal Survé. This
perhaps does raise some queries about the claims that the new company will make
its shareholders and backers wildly wealthy. The fly in the ointment however was the last-minute
discovery by the JSE that Sagarmatha Technologies might not be compliant with some
requirements of the Companies Act and consequently cancelled the listing. Dr
Survé could now ask A2X, the competing stock exchange, if they will list his
company. Perhaps they are less fussy with rules.

A Unicorn, by the way, is not only a mythical
beast but is also a “technology start-up worth more than a billion dollars”.
Great stuff for a bunch of small business who have yet to demonstrate that
their products attract enough customers and earnings to be worthy of that valuation
in rands let alone dollars. And that MSP thing? Well, apparently Google and
Amazon are fine examples!

Our tax
collecting agency SARS, has warned taxpayers that any profits they make from
trading bitcoins and other so-called cryptocurrencies must be declared. There’s
not much chance of that happening. Not only are the deals unreported to any
authority and therefore probably invisible, but also it is doubtful that many
locals have actually banked any true profits. Rather, the taxman could be
swamped with losses used to offset profits made in other more conventional
securities. Interestingly, the massive price spike working its way through the Bitcoin
market at present has spawned a number of far more sanguine analyses about the drawbacks
and illusionary benefits of the fascinating and novel block-chain structure on
which the “crypto assets” depend. The number of participants who truly
understand how they work and how they might be valued remains very small.
Caveat Emptor.

While
athletes in the green and gold have been collecting a wonderful haul of medals
at the Commonwealth Games, no nation can equal the record set by the chaps from
Cameroon who have swept the board in the unscheduled Hide and Seek event. Eight
of them disappeared several days ago and so far, no one in Australia has found
them. I doubt they’ll come back for the medal ceremony though.